Google’s parent company, Alphabet, is once again in the spotlight as they engage in advanced discussions to acquire the cloud cybersecurity startup Wiz. Sources close to the deal revealed to TechCrunch that talks are progressing, with a potential acquisition at a substantially higher valuation than previously considered.
Initially, the two companies were on the verge of finalizing a deal last summer at a valuation of $23 billion. However, the transaction fell through, leaving both parties to revisit the negotiation table. This time around, reports from The Wall Street Journal suggest that the price under discussion has escalated to around $30 billion, indicating a significant increase in the potential acquisition cost.
Leading the charge for Google’s cloud division in this endeavor is Thomas Kurian, emphasizing the strategic importance that Wiz’s cloud security products hold for Google Cloud’s existing customer base. The allure of Wiz’s impressive annual recurring revenue (ARR) figures further bolsters the appeal of this potential acquisition. With an ARR of $500 million as of last July, Wiz has set its sights on reaching $1 billion in ARR by 2025, as reported by TechCrunch.
Despite Wiz’s promising financial trajectory, a $30 billion price tag would undoubtedly represent a substantial premium. The startup previously concluded a funding round of $1 billion at a valuation of $12 billion in May, only to witness a valuation surge to $16 billion in a recent employee tender offer.
Anticipating potential growth and expansion, Wiz made a strategic move by appointing Fazal Merchant, a seasoned executive with experience from Dreamworks and Tanium, as its chief financial officer. While Wiz has dismissed any plans for a public offering in 2025, the addition of a CFO often signals preparations for future financial endeavors, including a potential IPO.
Past negotiations between Google and Wiz stumbled over disagreements regarding the integration of Wiz into Google Cloud versus maintaining it as a separate entity. Additionally, the stringent regulatory environment under the Biden administration posed challenges for large-scale transactions, contributing to the breakdown of talks last summer.
Recent trends indicate a surge in merger and acquisition (M&A) activity, with hopes pinned on a less restrictive approach from the FTC under the leadership of Chair Andrew Ferguson compared to the previous administration. Investors and industry insiders are closely watching these developments as they navigate the evolving landscape of tech acquisitions.
Founded in 2020 by four former Israeli military officers, Wiz has swiftly made a mark in the cloud cybersecurity arena, building on their prior success with the cloud security company Adallom, later acquired by Microsoft for $320 million. With backing from prominent investors including Andreessen Horowitz, Cyberstarts, Index Ventures, Insight Partners, and Sequoia, Wiz has garnered attention for its innovative approach to cybersecurity solutions.
While the potential acquisition buzz surrounding Wiz and Google continues to capture headlines, a spokesperson for Wiz declined to provide any comments on the ongoing deal discussions. As the tech industry eagerly awaits further updates on this high-profile transaction, the fate of Wiz hangs in the balance, poised for a potential transformation under the Google umbrella.
Marina Temkin, a seasoned venture capital and startups reporter at TechCrunch, brings a wealth of expertise to the table, shedding light on the intricacies of the tech acquisition landscape. With a background in financial analysis and a CFA charterholder designation, Marina navigates the nuances of deal-making with precision and insight.
Ingrid, a writer and editor based in London, has been a stalwart presence at TechCrunch since February 2012. Her in-depth coverage of mobile technology, digital media, and advertising paints a vivid picture of the ever-evolving tech industry landscape. Fluent in multiple languages, including Russian, Spanish, and French, Ingrid brings a global perspective to her reporting, enriching the reader’s understanding of the interconnected world of tech and innovation.
